China Clean Energy halts biodiesel production on 35 percent cost hike for waste oils and seed feedstock
In China, China Clean Energy halted all biodiesel production in its Fujian province operations owing to increased feedstock prices and biodiesel price controls. The company uses yellow grease, cotton seed waste and rapeseed waste, and saw costs rise to $500 per ton, up from $368 per ton in the 4th quarter of 2007.
China’s central government has been attempting to switch feedstocks to continue to produce biofuels while not affecting the food supply. The Ministry of Finance recently announced subsidies to promote the production of biofuels from non-food feedstocks. The subsidies will be flexible, and tied to the price of crude oil. Farmers will receive up to $878 per acre planted with forest products for biofuels, and up to $791 per acre for crops planted for biofuels.
Also, the central government will plant more than 15,000 acres of Chinese pistache trees as biofuel feedstock in Hebei province, relying on their tolerance of drought and low-fertility soil, and the 40 percent oil content of their seeds.
Overall the seven regions designated by the State Forestry Administration (SFA) in 2006 to grow biofuel demonstration forests (Hebei, Anhui, Hunan, Sichuan, Yunnan and Shanxi provinces and Inner Mongolia Autonomous Region) will cultivate a total of 830,000 acres of Chinese pistache, jatropha, yellowhorn and Wilson’s Dogwood by 2010. Hebei’s overall plan is to grow more than 1.7 million acres of biodiesel forest by 2050 to provide more than 500 Mgy of biodiesel.
The Chinese Ministry of Agriculture had announced last month that it is reviewing the land allocations for biofuels crops, with clear indications that food would be given priority over fuel. COFCO, operator of a 200,000 ton ethanol plant in Guangxi, is seeking feedstocks from Vietnam and Thailand. But biodiesel producers, who depend largely on non-food crops, expect to be largely spared from curbs on production.
The expansion takes place under the auspices of China’s Green Poverty in Reduction program which was launched in 2006. The $8.5 billion project is a joint venture between the United Nations Development Programme (UNDP), China’s Ministry of Science and Technology and the Ministry of Commerce. The project aims to develop biofuels and other eco-friendly projects in China’s poorer western provinces.
